The Commission on Audit has admonished the Philippine National Railways, or PNR, for omitting nine serviceable motor vehicles valued at P6.622 million from its books or financial records.
According to state auditors, the issue was brought to the PNR’s attention as early as 2016, but the organization has taken no measures so far. The nine motor vehicles were from the completed projects of PNR from 2010 to 2015.
The 2022 audit showed that the PNR failed to provide documentation to substantiate the transfer of ownership of the nine vehicles from the contractor despite the PNR making annual registration payments for the said vehicles.
“Further investigation revealed that the certificate of registration of the said nine motor vehicles are registered under the name of the previous contractors,” the CoA report said.
CoA Circular 2017-004 stipulates that as long as the agency controls the PPE, or property, plant and equipment, the same shall be recognized as part of the PPE of the agency. PPE is subject to agency control but not ownership.
The agency under audit, CoA said, is still responsible for acknowledging the expenses and corresponding accumulated depreciation and impairment losses of existing PPE, which were not previously recognized due to lack of ownership or title based on contracts, memoranda of agreement, and other pertinent factors.
Understatement
“The non-recognition of the cost of motor vehicles and corresponding depreciation and accumulated depreciation understated the Transportation Equipment, Accumulated Depreciation, and Accumulated Deficit as of December 31, 2022,” CoA said.
PNR in 2022 incurred an understatement of Depreciation Expenses and Accumulated Deficit, amounting to P50.546 million and P253.729 million, respectively.
Moreover, audit findings revealed that several PNR offices assign and use the motor vehicles, necessitating their inclusion in the books or official records.
Citing the reason of PNR, the CoA disclosed that the motor vehicles remained unrecorded due to a lack of proof of ownership. It then directed the PNR to mandate its Controllership Division to officially acknowledge the nine motor vehicles in their books.
PNR said it would comply with the CoA order.